A SIG Buy-side Member requests your input on recent trends, specifically operating in an inflationary market.
Sourcing and procurement practitioners are now recognizing shifts in cost avoidances vs. cost savings. A pattern seems to emerge, where cost avoidance as a methodology is rising while hard savings are decreasing.
We can assume that avoidances are rising as we spend much time negotiating cost increases, which may have been built into contracts but had not yet been invoked by the supplier. In comparison, hard savings are more difficult to obtain as market competition is fading and costs are rising.
This Member is asking:
1 - Are you seeing this same pattern in your methodology and approach (cost avoidance efforts increasing but hard dollar savings decreasing). Or, on the other hand, are cost avoidance efforts increasing, yet yielding less than expected success, while efforts targeting savings opportunities remain steady, and are yielding better than expected results?
2 - What factors are contributing to the shift?
3 - What actions have you been taking when a supplier invokes the cost increases?